NEW RULES FOR LEGAL CONVEYANCING IN SINGAPORE

With effect from 1 August 2011, new measures to safeguard conveyancing as provided in the Conveyancing (Miscellaneous Amendments) Act (Act 17 of 2011) shall come into force.

Conveyancing rules in Singapore previously

Conveyanging Lawyer Zulkifli Amin ­ran away with client’s conveyancing money meant for a property purchase. About $6 million was reported missing from the conveyancing accounts. (01 Jan 2008, The Straits Times)

In the past, when you paid for your typically 1% Option to purchase for a property, on exercising the option, you would need to pay 4% of the property price to complete exercising the option.

It is when a property buyer submits this 4% of funds that things can go wrong.

This is because Law firm’s hold his money from their own bank account first and issue out a cashier’s order to pay the seller’s stipulated law firm on exercising the option.

However, in the above case, the lawyer took the 4% and failed to exercise the option by paying the seller’s appointed lawyer and siphon the funds from the law firm. This means that the property deal fell through. And the property buyer lost the 4% of the property price.

Law firms cannot Hold Stake holder’s money

Law firms in Singapore will be required to set up a special account with the designated banks or with Singapore academy of law. This money is kept safe by requiring 2 signatories of both the buyer and seller lawyer.

For property buyers, things are perhaps quite transparent, all they have to do is add “-CVY” to a law firm’s name when you write out a cheque or cashier’s order.

As an illustration, Tan and Partners LLP, when you write a cheque, all you have to do is Pay to “Tan and Partners LLP – CVY”

You can also find more information at the Ministry of Law website.

Conveyancing lawyer

MAXIMUM FLOAT OF S$5000 IS ALLOWED TO BE HELD BY LAWYER

During a property transaction, there are often adjustments such as property tax, MCST charges and other miscellaneous costs which needs to be adjusted during a transaction. Your lawyer may ask for up to S$5000 to meet this need. You can either provide this money into a Non-conveyancing account or you may add “-CVY” to the name of the lawyer.

IMPLICATION OF CONVEYANCING RULE ON PROPERTY INVESTORS

With the new move, the conveyancing monies are protected. However there is an additional cost incurred by the lawyers. They could S$100 to $150 per transaction, including possible compliance and administrative costs, this could bump up the lawyer’s cost by between $200 to $400 at the very least.

Many conveyancing lawyer firms we spoke to felt that it’s a good move to protect client’s money. However they may have no choice but to pass on the additional cost.

Naturally an orderly and safe transactional environment is welcome, but the additional costs that comes with it, is not welcomed.

The new moves will definitely enhance Singapore as one of the major investment destinations as the process becomes safer.

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